Gucci redesign hurts Kering

A deep reorganisation at the heart of Gucci took its toll during the first quarter as sales at Kering's flagship luxury brand fell much more than expected.

Like-for-like sales dropped 8 per cent compared with the same period last month - much more than the fall of between 3 per cent and 6 per cent the market expected.

The figures came as parent group Kering reported a 0.6 per cent fall in like-for-like sales compared with the same period a year ago, with revenue totalling €2.7bn during the first three months.

On a reported basis, revenue during the first three months at the group level increased 11.4 per cent - with an increase of 10.9 per cent for the Paris-based group's luxury division and a 12.7 per cent increase at its sports and lifestyle business.

On Tuesday, Kering said that Gucci, which makes up about half of revenues at Kering's luxury division, said that the brand was "in a period of transition".

Luca Solca, analyst at Exane BNP Paribas, said, "Gucci is missing a beat against difficult comps and in the midst of senior management transition - even beyond what consensus was anticipating".

He added: "A lot is underway - both in organisation merchandising terms - to improve performance down the road."

The worse-than-expected figures - reported sales growth was nearly 4 per cent - comes after the brand in January appointed Alessandro Michele, its relatively unknown accessories designer, as creative director following the exit of Frida Giannini.

Ms Giannini and Patrizio di Marco, chief executive and the partner of Ms Giannini, left Gucci after they failed to stem falling sales at the brand.

Bottega Veneta, Kering's other leading luxury brand, also suffered during the first quarter, growing a modest 3 per cent during the first quarter on a like-for-like basis - and 16 per cent on a reported basis.

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